17. In the retail inventory method, abnormal shortages are deducted from both the cost and retail amounts and reported as a loss.
Test Bank for Intermediate Accounting, Fourteenth Edition 9 - 8 18. The inventory turnover ratio is computed by dividing the cost of goods sold by the ending inventory on hand. 19. The average days to sell inventory represents the average number of days’ sales for which a company has inventory on hand. *20. The LIFO retail method assumes that markups and markdowns apply only to the goods purchased during the period. True False Answers— Conceptual Item Ans. Item Ans. ItemAns. Item Ans. a. It is inconsistent because losses are recognized but not gains. b. It usually understates assets. c. It can increase future income. d. All of these. 1. T 6. T 11. F 16. F 2. F 7. T 12. T 17. T 3. F 8. F 13. F 18. F 4. T 9. F 14. T 19. T 5. F 10. T 15. F 20. T MULTIPLE CHOICE —Conceptual 21. Which of the following is true about lower-of-cost-or-market? 22. The primary basis of accounting for inventories is cost. A departure from the cost basis of pricing the inventory is required where there is evidence that when the goods are sold in the ordinary course of business their 23. When valuing raw materials inventory at lower-of-cost-or-market, what is the meaning of the term "market"? 24. In no case can "market" in the lower-of-cost-or-market rule be more than